Amazon MP3 Store, ITunes and Strategy
Wendy Davis writes today, “Around 90% of the people who purchase MP3s from Amazon have never used iTunes, according to the NPD report, as per Ars Technica. Additionally, the stores are attracting different customers, with men accounting for 64% of Amazon buyers, but just 44% of iTunes buyers.”
She notes that the good news for Amazon, MySpace and other existing or new digital music stores because the market has plenty of room to grow. True. She also mentions the DRM-Free debate which is a whole other but related subject.
What I found noteworthy about the NPD finding that the digital music market is bigger than the current ITunes demographic is the lesson about strategy, targets, and technology. Not that Amazon needs a lesson in where to fish or strategy; just that it seems to illustrate the importance of having a strategy, defining a target and introducing technology that is appropriate for your target and your strategy.
Although the NPD data on the subject was not available first hand and the data reported by ArsTechnica didn’t really say what percentage of Amazon MP3 users were Amazon customers, I think that it can be implied that they most likely were a significant percentage. Amazon has been built on consistent customer focused strategies.
A recent Fortune article quoted Jeff Bezo as saying, “Customers want three things: the best selection, the lowest prices, and the cheapest and most-convenient delivery. ” OK, you start with book, lots of books at low{er} prices, ship quickly (quick, even with free option), great experience design and service which brings a satisfied loyal customer base. Expand from there.
The Amazon MP3 Store is an alternative version of the “fish where the fish are” strategy; Amazon fishes in their own customer pond ( CDs, book buyers) but stocks it with different kinds of fish.
As quoted on Ars Technica, NPD analyst Russ Crupnick said, “Based on US CD sales, Amazon is among the largest sellers of physical music and boasts a substantial and loyal buyer base—many of whom may not be in the iTunes market sweet spot.”
“90% of those purchasing MP3s from Amazon have never purchased from ITunes” sounds like a positive outlook to me. Extremely positive. Conventional wisdom might have said that Amazon would be competing directly with ITunes because that’s where the pay for tunes crowd is.
But maybe Amazon focused on their own customer and applied their “three things”model and their strategy went something like, leverage Amazon Brand equity and offer DRM-Free music downloads to current customers who
visit Amazon.com because of positive past experiences or new customers who heard about Amazon mp3 through positive word of mouth.
As Bezo said in a Business Week Interview in 2004, “We work hard at being very customer-obsessed and expressing that through innovation…we see our customers as invited guests to a party, and we are the hosts.” Amazon is able to expand the market for digital music downloads because people trust Amazon and want to do business with them.
And let’s not forget the strength of the Amazon recommendation system, “recommended because you purchased X”, “people who bought X also bought Y”, “You may also like”….this is behavioral targeting personified. Of course they also have peer reviews, ListMania, author blogs and product picture uploads. And if you are an Amazon customer you have an Amazon profile page. The elaborateness of it and the privacy settings
are up to you. But Amazon is a social place; by design. Which brings me to the strategy, targets and technology lesson I mentioned earlier.
Marketers seem to know that they are supposed to have a copy strategy to create advertising and objectives and strategies to build a marketing plan. Yet, it frequently seems that when it comes to social media, the strategy rules are not applied; not necessary. Wrong! Scott Donaton at AdAge courtesy of Ted Defren’s blog called it the GMOOT (Get Me One Of Those)Syndrome…a desire to do something in new media, strategy not required.
And I have met too many marketers; some of them are clients (I am reasonably safe in saying this because although they want a blog, they don’t want to actually read one even though I tell then people are talking about them on line) who take the GMOOT path to social media….aka Ready, Fire, Aim.
Charlene Li and Josh Bernoff write about their P.O.S.T method for building a social strategy on their blog and in more detail in their book, Groundswell; POST stands for people, objective, strategy and technology. It’s “Ready, Aim, Fire 2.0″.
With the POST method you begin building with People; by determining where your target customer is on the social adoption curve or the social technographics ladder. In other words, in which pond should you fish.
O means you need to have objectives such as you want your customers who are already in the Amazon pond and who are interested in music, have an MP3 player or who are currently buying one, and therefore tech savvy enough to download music at the Amazon MP3 store even though they are not necessarily downoading at ITunes. The Strategy will be about enhancing the relationship with your customer; in Amazon’s case by offering a huge selection of MP3 downloads with Technology that is easy, quick, less expensive than ITunes and DRM-free.
I think their strategy completely explains why Amazon will grow the digital download market. They have the pond. The fish are ready to bite and the bait is of the highesy quality for the lowest price; and no DRM. And 90% is about as big as you can hope for. So aim. And read Groundswell.
You can buy it at Amazon….and review it, tag it and get other recommendations based upon its purchase.
HP: Customer Experience Disconnect
In May 2007 I purchased my youngest son an HP Pavilion Notebook so that he would have a bright shiny new laptop to start high school with in the fall. We looked at several different options but what tipped the scale towards HP was Eric Kintz. Eric and I had “connected” via our blogs but hearing him speak about HP’s commitment to customer centricity at the Forrester Marketing Forum in April 2007.
Here are some of the things Eric highlighted (Thanks Josh): The importance of integrating the customer into driving the business, measure and manage what matters to the customer, and inspire employees to drive customer centricity. He talked about their understanding that customer service is an important touch point and how HP is focusing on customer experience training.
So, here has been our experience. The brand new shiny laptop that Sam took to school everyday to take notes on and help him keep organized (hat tip to Microsoft OneNote) stopped working in late November. My older son spent HOURS on the phone with HP tech support (we won’t even talk about the nightmare of their off shore tech support). I am not sure of the details but it was agreed at the end of the conversation that although they had gotten it booted up, HP would send a box so that at the end of the semester, it could be returned to HP to really fix the problem.
The box arrived. No instructions or paperwork inside. Well, we would wait till the semester ended anyway since the computer was kind of working. Problem was, the computer died again right before Sam’s finals. I began calling HP. Well, what turned out to be a system wide continuing issue surfaced: they couldn’t find any record of the original phone call. Although they give you several different numbers every time you call and ask for your phone number, they never seem to be able to find the records.
Even when I returned a call in February to someone in their so called executive customer service they began their typical “do you have a {fill in the blank} number” interrogation…I stated my name and said, I am returning your call.
So, in December, they apologized for the “no directions” box and said they would send another one right out. Weeks went by. No box. I called again. No records of the call. We begin again. They will send a box and I add the new set of numbers to be collection.
They box arrives. Of course unfortunately, a new semester had begun and Sam had to start school without his laptop. The computer arrives at HP. A flurry of emails announces all this. The status report states: Atlantis and Apollo Motherboard issue. An email arrives saying that though they would like to return the laptop but they do not have the part. Several more weeks go by and finally the laptop arrives home. Yippee!
The enclosed letter from HP thanks me for choosing HP to repair {their inferior} product. It says that HP “created this repair program to ensure it is repaired to the original product specifications {could that be the problem?}.”
The letter goes on to say, “HP is committed to creating superior products which offer the highest standards of quality, durability and reliability.” Sounds like Eric’s talk.
The first problem is that this letter says that the problem was a bad LCD and that they had replaced it. NOTHING about the Atlantis and Apollo motherboard.
The second and larger problem was that Sam had his laptop on for about 3 hours when it stopped connecting to the internet exactly like it had before it died the last time. Huh?
I called HP. Of course. No records. I finally get an English speaking customer service person who first tells me that although they were very sorry, the motherboard unfortunately was not repaired and that we would have to send it back. As we talked a bit more he said that this was a “known issue.”
So I will digress a bit here to the issue of the known issue.
Known issue? Have you heard that term before. “Known to who exactly.” About six months ago I got a letter from the Ford Motor Company telling me there was a “known issue” with my son’s 2003 Ford Explorer and all other Explorers model year 1992-2004. It seems that there is a defect in the cruise control that causes it to “catch on fire”, “possibly to blow up.” It advises not to park the car near your home. OK, so the letter is dated August 2007. Exactly when did this issue become known? In 2005 when apparently the problem stopped? Kind of reminds me of “The Formula” in the Fight Club
Of course, though we now all know about the issue, none of the Ford dealers in the Missouri or Illinois metro have the part in stock.
With T-Mobile, although I have Wi-Fi at home, in November I noticed that they were counting my Wi-fi at home minutes as anytime minutes. After being transferred all over the T-Mobile system just to find someone who even knew what I was talking about, he promised he was putting in a “help desk” ticket to investigate because it was not a “known issue.” Long story short, 2 1/2 months later, after dozens of phone calls from me (I have a collection of names and employee numbers) they decided it was in fact a “known issue”. As of this month, I still had to spend 45 minutes on the phone with billing straightening out the mess.
On another issue, that t-mobile says is not a “known issue” and not covered by the one year warranty,” the track ball falls out of my Blackberry Curve,I have been waiting 5 days for a “manager” to call me back within 3 business days.
I asked them about their announced upcoming pro-rated termination fees thinking that I would rather get an iPhone than buy a new Blackberry from t-mobile given their “too bad so sad” attitude. They didn’t know anything about it. $200 to cancel one phone contract, $600 to cancel all three. Thanks, it may be worth it.
Back to HP and the known issue of the Apollo and Atlantic motherboard. The rep said that he would “escalate” the problem (meaning he would overnight the return box) and that we should have the laptop back with a repaired motherboard in about 7 days. That was January 22nd. He gave me a whole new set of tracking numbers. He apologized and said if it happened again they had a program that might replace the unit; had to malfunction three times, not two.
Off it went. It was at this point that I emailed Eric Kintz and finally got a response by leaving a comment on his moderated blog. He put me in touch with the friendly folks at executive customer service that I mentioned above. Suffice it to say, that did not solve the problem. I was assigned a “case manager” who promised that his job was to provide one-to-one assistance in solving my problem.
What did that mean exactly? He said he would look into the availability of the “part.” He assured me there was not a motherboard known issue. Despite the fact that someone else at HP had said those exact words and the fact that it is all over the web, all over the HP Forums, and being blogged about by those experiencing the almost identical treatment that we have received.
KD Paine writes that she was a lifelong fan and is now a permanent skeptic. Political Thinking has posted some of his correspondence with HP.
Well one way he dealt with it is they removed the statement regarding the Atlantis and Appollo Motherboard from my “ticket” and replaced it with something about a service enhancement program. I think it is a warranty extension.
Does that mean that they will keep fixing the defect every time it breaks, forever and ever?? How special!
But the problem with my problem is that it is really my son Sam’s problem. He does not have his much needed laptop to take to school. After spending over $1200 at Best Buy on this HP computer just six months prior to its collapse I am left with no choice at this point but to buy him a new laptop. It will be a Mac.
Why buy a Mac? Take HP’s Eric Kintz’ three points from his Forrester talk and then think of Apple.
- Integrate the customer into driving the business
- Measure and manage what matters to the customer
- Inspire employees to care about the customer
I have heard representatives from HP, Sprint, Sony and many others speak at WOMMA and Forrester conferences about customer centricity and improving customer experience. I have experienced just the opposite customer experience.
Although I have never heard Apple speak on the topic at any of these venues, I have experienced Apple customer focus. I bought a MacBook following my negative experience with my Sony Vaio. If I have a question, I can call up and get an answer. If something isn’t working right, I can call AppleCare or take my MacBook to the GeniusBar.
There are free workshops offered in the Apple Store on various topics to enhance the user experience. If you need one-to-one help for $100 you can get private instruction once a week for a year with one of the inspired Apple employees who always give you just a little more than you ask for….instead of a lot less.
Bruce Temkin, the VP and Principal Analyst at Forrester who covers customer experience at Forrester recently quoted Morpheus from the Matrix in his blog post highlighting the disconnect between what their research indicates is the importance that theyplace on customer experience and reality: “Sooner or later you’re going to realize, just as I did, there’s a difference between knowing the path and walking the path”
Let me put this in the most personal of terms. HP, my son Sam needs a computer. Isn’t that what we paid for?
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